OM Malik is one of my favorite bloggers. He generally writes about the technology industry with a focus on telecoms and the Internet. Today he covered news of Verizon Wireless and Google jockeying for position prior to the American 700 MHz spectrum auctions coming in January. It’s clear that both sides believe that much is on the line.

From Verizon Wireless’ perspective they must have at least 2 objectives in winning the auction. First, to acquire more spectrum to expand their existing business. They’d prefer additional nationwide spectrum. But I’d expect them to hedge that bet by selectively bidding for regional licenses.

Second, they can hope to eliminate a competitor, or at least reduce the scope across which a competitor might compete with Verizon Wireless. Both are clearly worth billions. Trailing 12 month revenue for Verizon Wireless is $91 billion. If a competitor or competitors could deny Verizon Wireless as little as 10 percent of that market it makes the cost of licenses pale by comparison.

A lost opportunity of $10 billion/ year has a net present value of around $25 billion. If that represented the cost of doing nothing, spending $10-12 billion to buy more spectrum seems like a way to save $15-13 billion. I count on Verizon Wireless to go all out before the auctions and to bid ferociously during them.

This show is only starting folks. don’t touch that dial.

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Vodafone and Verizon are again in the news. I’ve posted a recent story to our message boards, and written about them previously in the context of the upcoming American 700 MHz auctions. (Full disclosure: I used to work for AirTouch, which was acquired by Vodafone, and for Arun Sarin, now CEO of Vodafone.) The recent news is about their difficulties getting along together and about the possibility that the dividend Verizon pays to Vodafone, as a major stockholder, might not be paid again until 2010 or later. (more…)

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So today the American Federal Communications Commission decided to make the winner of the upcoming 700MHz spectrum auctions accept terminals and applications from 3rd-parties. This was at the suggestion of Google and others, and is excellent news for American consumers. It likely will lead to more handsets from which to choose and more innovative applications being available more quickly. Probably it also will mark the beginning of the end of the glory days for America’s incumbent mobile operators.

This ruling heralds much more difficult times for America’s coddled mobile operators. Handset choice and the ready access to innovative applications are not what they are known for. These will force them to change their current business models, which is likely to reduce their margins as well as their subscriber numbers. Their good times now have a hard stop.
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